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Investigating the Impact of Publicly Announced Information Security Breaches on Three Performance Indicators of the Breached Firms

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  • Myung Ko

    (The University of Texas at San Antonio, USA)

  • Kweku-Muata Osei-Bryson

    (Virginia Coomonwealthe University, USA)

  • Carlos Dorantes

    (The University of Texas at San Antonio, USA)

Abstract

This article examines the impact of information security breaches on organizational performance. Until now, there have been only a few empirical academic studies that have investigated this issue and they have investigated information security breaches with the focus on the short-term impact on the market value of the firm. This study offers an alternate approach to investigate this issue as it explores the impact of breaches on financial performance of the firm, one year after the breach. Using a “matched sampling” methodology, we explored the impact of each type of breach (i.e., confidentiality, integrity, and availability) and also by IT intensity and size. Our results suggest that the direction of the impact (i.e., positive, negative) is dependent on the type of security breaches and also the impact of IT intensive firms is different from non-IT intensive firms. Our study also includes some important implications for managers and stock market investors.

Suggested Citation

  • Myung Ko & Kweku-Muata Osei-Bryson & Carlos Dorantes, 2009. "Investigating the Impact of Publicly Announced Information Security Breaches on Three Performance Indicators of the Breached Firms," Information Resources Management Journal (IRMJ), IGI Global, vol. 22(2), pages 1-21, April.
    • Handle: RePEc:igg:rmj000:v:22:y:2009:i:2:p:1-21
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    File URL: http://services.igi-global.com/resolvedoi/resolve.aspx?doi=10.4018/irmj.2009040101
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    Citations

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    Cited by:

    1. Syed Emad Azhar Ali & Fong-Woon Lai & Ahmad Ali Jan & Haseeb ur Rahman & Syed Quaid Ali Shah & Salaheldin Hamad, 2024. "Does intellectual capital curb the long-term effect of information security breaches on firms’ market value?," Quality & Quantity: International Journal of Methodology, Springer, vol. 58(4), pages 3673-3702, August.
    2. Rosati, Pierangelo & Cummins, Mark & Deeney, Peter & Gogolin, Fabian & van der Werff, Lisa & Lynn, Theo, 2017. "The effect of data breach announcements beyond the stock price: Empirical evidence on market activity," International Review of Financial Analysis, Elsevier, vol. 49(C), pages 146-154.
    3. Sepideh Ebrahimi & Kamran Eshghi, 2022. "A meta-analysis of the factors influencing the impact of security breach announcements on stock returns of firms," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(4), pages 2357-2380, December.
    4. Kristin Masuch & Maike Greve & Simon Trang, 2021. "What to do after a data breach? Examining apology and compensation as response strategies for health service providers," Electronic Markets, Springer;IIM University of St. Gallen, vol. 31(4), pages 829-848, December.
    5. Humayun Zafar & Myung S. Ko & Kweku-Muata Osei-Bryson, 2016. "The value of the CIO in the top management team on performance in the case of information security breaches," Information Systems Frontiers, Springer, vol. 18(6), pages 1205-1215, December.

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